Supreme Court lets Energy Watchdog join JBVNL captive power inquiry as fact source
A bench of Justices Pamidighantam Sri Narasimha and Alok Aradhe declined to disturb a Jharkhand High Court order allowing Energy Watchdog to be heard in JBVNL proceedings.
The Supreme Court declined to interfere with an interim order of the High Court of Jharkhand that allowed an outside body, Energy Watchdog, to be heard in proceedings begun by Jharkhand Bijli Vitran Nigam Ltd. (JBVNL) against Amalgam Steels and Power Ltd. over captive power supply. In an order dated 3 September 2026, a division bench of Justices Pamidighantam Sri Narasimha and Alok Aradhe held that the High Court’s interim direction, permitting a non-party to place facts before JBVNL, could not be called perverse and did not warrant interference under Article 136. The Court disposed of the Special Leave Petition while clarifying it had expressed no opinion on merits, leaving open the question of third-party intervention for final hearing.
How the captive power dispute reached the Court
Petitioner no.1, Amalgam Steels and Power Ltd., had entered into an agreement with JBVNL on 17 May 2012 for supply of surplus power from its captive power plant to petitioner no.2. The agreement was renewed in 2017 and 2023.
On 15 April 2024, Energy Watchdog complained to the Additional Chief Secretary, Department of Energy, Government of Jharkhand, alleging that petitioner no.2 was using power from the captive generation unit without a valid ‘captive user’ status under Rule 3 of the Electricity Rules, 2005. It sought action under Section 135 of the Electricity Act, 2003.
The Government of Jharkhand and JBVNL began a fact-finding inquiry on 28 June 2024. Energy Watchdog then filed a public interest litigation before the High Court, seeking a declaration that the supply without Open Access Approval and without meeting captive status conditions was illegal, along with directions for investigation and recovery of loss caused to the state utility.
On 26 August 2025, JBVNL issued show cause notices alleging breach of the CPP Agreement, supply without consent, and violation of its right of first refusal. The same day, JBVNL issued a demand notice for cross subsidy surcharge of Rs.176.74 crores against petitioner no.1 and Rs.108.17 crores against petitioner no.2.
The High Court order under challenge
Petitioner no.1 filed an interlocutory application objecting to the maintainability of the PIL. By an interim order dated 5 February 2026, the High Court held that JBVNL’s affidavit disclosed prima facie substance in the allegations, sufficient to reject the objection. It found the PIL maintainable.
Recording that Energy Watchdog was not privy to the contract between JBVNL and petitioner no.1, the High Court nonetheless directed that in the peculiar facts of the case, the interest of justice would be better served if the body were heard along with the petitioners in the proceedings pending pursuant to JBVNL’s show cause notice.
Arguments on locus and the statutory scheme
Dr. A.M. Singhvi, Senior Counsel for the petitioners, argued that Energy Watchdog was a stranger with no right and no legal injury, and so could not be treated as a person aggrieved with locus to maintain the writ petition. He submitted that the Electricity Act is a comprehensive and self-contained framework, and that the High Court could not judicially expand it by introducing a tripartite process by letting a non-party join JBVNL’s proceedings. After completion, he said, the body could pursue any remedy available in law.
Mr. Prashant Bhushan, for Energy Watchdog, submitted that the petitioners had not paid cross subsidy surcharge and that an inquiry followed six complaints. The demand, he said, was raised under the Jharkhand Open Access Rules, and no interference was called for.
The Court’s reasoning on the regulatory regime
The Court referred to PTC India Ltd. v. Central Electricity Regulatory Commission, where a Constitution Bench held the Electricity Act to be an exhaustive code for all matters concerning electricity. It also cited Southern Power Distribution Company of Andhra Pradesh Ltd. v. Green Infra Wind Solutions Ltd., which reiterated that after unbundling and the constitution of the Central and State Regulatory Commissions, no unallocated regulatory residue was left outside the regulatory bodies.
The Court set out the statutory functions: Section 79 for the Central Commission, with Section 79(3) requiring transparency; Section 86 for the State Commission, with Section 86(1)(f) directing adjudication of disputes between licensees and generating companies; and Section 94(3), empowering the Commission to authorise a person to represent consumer interests. It said the High Court must consider this regulatory regime before passing the final order.
Why the interim direction survived Article 136 scrutiny
The Court noted that the SLP arose out of an interim order pending disposal of the writ petition under Article 226, and that the question before it was the legality of the interim direction letting Energy Watchdog participate in JBVNL’s proceedings. The High Court had directed the writ petition to be heard further, but the SLP was filed first, and on 23 March 2026 the Court had issued notice and directed status quo.
The bench observed that the facts presented had given the High Court an impression that all was not well in the inquiry to be conducted by JBVNL, and that the High Court had detailed the circumstances in which action was not taken despite a long-standing complaint.
While conscious that Energy Watchdog was not privy to the CPP Agreement, the Court accepted the High Court’s conclusion that full facts needed to be brought to JBVNL’s notice through a party other than the petitioners, so an appropriate decision could be reached. The interim measure, it held, could not be termed perverse at this stage.
The Court added that JBVNL must take its own decision after due deliberation, and that the direction for oral hearing was not to be converted into a court or tribunal but treated as a means to collect information to enable action.
Order
The Court declined to interfere with the High Court’s interim order, making clear it expressed no opinion on merits. It said the High Court would, at final hearing, consider all aspects, including the scope and ambit of third-party intervention in proceedings arising under the Electricity Act. With that clarification, the Special Leave Petition was disposed of, along with any pending applications.